Former Morgan Stanley Adviser Convicted of Defrauding NBA Players

A federal jury in Manhattan has convicted former investment adviser Darryl Matthew Cohen of defrauding three professional basketball players out of millions of dollars. The verdict, delivered today after a month-long trial, found Cohen guilty of wire fraud and investment adviser fraud.

Cohen joined Morgan Stanley in 2015 but was terminated in 2021 after the firm uncovered his conduct. Prior to his time at Morgan Stanley, he spent over a decade at Wells Fargo and also worked for Merrill Lynch.

While the jury reached a consensus on the fraud counts this week, according to third-party reporting, it was unable to decide on a third charge of conspiracy, leading the judge to declare a mistrial on that specific count. Cohen now faces a maximum statutory penalty of 20 years in prison.

The prosecution’s case was bolstered by testimony from Cohen’s former clients: current Portland Trail Blazers star Jrue Holiday and former National Basketball Association players Chandler Parsons and Courtney Lee. The athletes told the jury how Cohen convinced them to invest in viatical life insurance policies – investments that pay out when the original policyholder dies.

Evidence presented by prosecutors showed that these policies were purchased from brokers and then resold to the players at significant markups. One policy purchased for $465,000 was sold to a player for $1.6 million. Another policy bought for $620,000 was marked up to more than $2.5 million.

The players testified that Cohen directed them to buy these policies through a law firm he controlled alongside independent financial adviser Brian Gilder.

Beyond the insurance scheme, Cohen was convicted of moving nearly $800,000 from his clients’ accounts without permission:

• $500,000 was funneled from two players to a nonprofit amateur basketball group run by one of Cohen’s associates; and
• $300,000 was taken from Parsons’ accounts to pay off a disgruntled former professional baseball player who had also been a client.

Throughout the trial, Cohen’s defense team attempted to shift the blame to Gilder, who previously pleaded guilty in 2023, and to the players themselves. Attorney Michael Bloch argued that some transfers were made to help Parsons conceal his ownership of a sports agency, which would have violated NBA rules. Bloch contended that Parsons “had to lie to a lot of people” to protect himself from league discipline.

Morgan Stanley stated it had fully cooperated with federal authorities and resolved all client claims related to Cohen’s actions.

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